A significant number of people are now using gifts (usually from family members) to fund all or part of their deposit for a house purchase. Accordingly, it is important to understand the implications that such a gift will have on the conveyancing transaction.
If you are lucky enough to be receiving a gift, the following steps will need to be taken in addition to the usual conveyancing work:
- When applying for a mortgage, it is important that your broker and/or lender is aware of the fact that you will be receiving a gift as it may cause delays if this information comes to light after the mortgage offer has been issued. Depending on your lender, they may require the gift giver to complete a form and return various documentation before the offer can be issued.
- It is always important to give as much information as possible to a potential conveyancer when obtaining an estimate of conveyancing costs. Therefore, if you are aware at this stage that you will be benefitting from a gift, you should advise a potential conveyancer accordingly as an additional fee is likely to be charged due to the additional work involved. By doing this, you can ensure that you are aware of the potential costs involved from the outset and can budget accordingly.
- Once your conveyancer has opened your file, they will send you their client care paperwork which will include a request for information including how you are funding the purchase. Again, the more information given at this stage the better as your conveyancer will be able to deal with the gift element of the transaction sooner rather than later.
- Your conveyancer will need to then write to the gift giver to obtain the following documentation:
- Certified copy photographic ID (Passport or Driver’s Licence)
- Certified copy address ID (a bank statement or utility bill dated within the last 3 months)
- Source of funds evidence
- A letter confirming that they will not be living in the property and that they will have no interest in the property.
This information is essential to enable your conveyancer to comply with Anti-Money Laundering Regulations.
Your conveyancer will also recommend that the gift giver take independent legal advice. Please note that some lenders will not release monies until they have received confirmation that the gift giver has taken independent legal advice.
A gift giver may also wish to obtain tax advice from a specialist in order to establish whether there are any tax implications as a result of the gift.
- Depending on your lender’s requirements, your conveyancer may need to report the gift to them. If this is the case, your conveyancer will not be able to proceed to exchange of contracts until they have received your lender’s authority.
- Prior to exchange of contracts, a bankruptcy search and an online ID check will need to be carried out on the gift giver. Your conveyancer will revert to you if there are any issues with the results of either of these searches.
The key thing to remember is to let your conveyancer know if you are receiving a gift (no matter how large or small) as early as possible and let your conveyancer know if your circumstances change at any point during the transaction.
For further information, please contact Ashton Partridge, a Solicitor in our Property Department in Newton Abbot, by telephone on 01626 202370 or email firstname.lastname@example.org. WBW Solicitors has offices in Newton Abbot, Exeter, Torquay, Paignton, Bovey Tracey, Launceston, Honiton, Exmouth and Sidmouth.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.